Litigation Release No. 19852 / September 29, 2006

The Securities and Exchange Commission today announced the filing of securities fraud and registration charges against U.S. Gas & Electric, Inc. ("U.S. Gas") and four current and former principals of the company. The Commission alleges that between March 2002 and August 2003, U.S. Gas, acting through Larry Webman and Mel Webman, its undisclosed principals, Donald E. Secunda, its former chief executive officer, and Douglas W. Marcille, its then-chief financial officer, raised more than $6.8 million from investors in a series of unregistered offerings of securities. The defendants used telemarketers to offer and sell securities to approximately180 investors throughout the United States, many of whom were senior citizens. U.S. Gas is a start-up company in the business of providing natural gas to customers in the New York metropolitan area.

The Commission's complaint alleges that U.S. Gas, through the Webmans, Secunda and Marcille, made material misstatements and omissions to investors in the various offerings. More specifically, U.S. Gas, Larry Webman, Mel Webman, and Secunda misrepresented to investors in two of the offerings that U.S. Gas would register an initial public offering and that its stock would trade publicly, which would translate to generous returns for investors. In addition, they falsely represented to investors in three of the securities offerings that investors should expect to receive annual returns ranging from 25% to 50% for decades. Moreover, U.S. Gas, through the Webmans, Secunda, and Marcille, failed to disclose to investors that excessive commissions were being paid to the boiler room telemarketers out of the offering proceeds, and made misrepresentations to investors in one of the offerings regarding the amount of management fees that would be paid out. According to the complaint, Mel Webman, with the help of Larry Webman and Secunda, also misappropriated monies raised in one of the offerings.

The Commission's complaint also alleges that the proposed defendants violated the registration provisions of the federal securities laws by failing to file registration statements in connection with the offerings. The complaint further alleges that Larry Webman and Mel Webman acted as unregistered brokers of securities, and that U.S. Gas committed issuer reporting violations for failing to make required periodic filings with the Commission.

The Commission's complaint, filed in federal court in Miami, charges U.S. Gas with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 13a-1 and 13a-13 thereunder; charges Larry Webman and Mel Webman with violating Sections 5(a), 5(c) and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act, and Rule 10b-5 thereunder; charges Secunda with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder; and charges Marcille with violations of Sections 5(a), 5(c), 17(a)(2) and 17(a)(3) of the Securities Act.

Without admitting or denying the Commission's allegations, U.S. Gas, Secunda and Marcille each have consented to the entry of a final judgment that permanently enjoins each from future violations of the above-mentioned provisions of the federal securities laws. U.S. Gas also has agreed to pay disgorgement of $771,673, plus prejudgment interest thereon, of which all but $167,000 is waived based upon U.S. Gas's sworn representations of its inability to pay. Secunda has also agreed to pay disgorgement and a civil money penalty in amounts to be determined by the court at a later date, and has consented to permanent officer and director, and penny stock bars. Finally, Marcille also has agreed to pay disgorgement of $1 and a civil money penalty of $40,000.

Larry Webman and Mel Webman have not settled to the Commission's action. The Commission is seeking against the Webmans permanent injunctions from future violations of the above-mentioned provisions of the securities laws, disgorgement of ill-gotten gains, civil money penalties and orders barring them from participating in any offering or sale of a penny stock.

In a separate action on September 26, 2006, the Commission revoked the registration of U.S. Gas's securities based on its failure to make required periodic filings with the Commission.